By Tiernan Ray

Shares of Electronics Arts (EA) are down down $1.09, or almost 5%, at $21.26, following an article yesterday by gaming news site IGN‘s Mitch Dyer that said an EA development studio, DICE, will halt future game projects until it straightens out a thicket of problems with the recently released “Battlefield 4” combat game.

IGN has chronicled a series of issues with the title since EA released it last month for Sony‘s (SNE) PlayStation 4 and Microsoft ‘s (MSFT) Xbox. Yesterday, Dyer wrote that an EA representative said DICE is “not moving onto future projects … until we sort out all the issues with Battlefield 4.”

In a note to clients this morning, Pacific Crest’s Evan Wilson reiterated a Sector Perform rating on EA shares, writing that the problems have injured the value of the Battlefield franchise, and introduced risk to Street estimates for EA next year, writing that the whole matter “puts a Battlefield game next year at risk, especially after management hedging on the subject at recent investor conferences.”

No ‘Battlefield’ puts F2015 estimates at risk. The biggest difference between the Street’s $1.50 F2015 EPS estimate and our $1.10 is whether there is a Battlefield game next year. If there is no big DICE game in the year, we think EPS growth from EA is unlikely. Cobbling together small titles does not fill the profitability hole from a big game. The value of ‘Battlefield’ has declined. The disappointing launch this year from initial sales quantities, to reviews, to glitches has lessened the value of the Battlefield franchise and the probability that it can indeed knock Call of Duty off its perch. It also puts into question EA’s decision to standardize on the Frostbite engine.

However, Piper Jaffray‘s Michael Olson a short while ago stepped up to defend the stock, reiterating an Overweight rating, and a $33 price target, writing that “While EA has never confirmed timing of BF5, we believe the company has split development into two teams working on annualizing the Battlefield franchise and we have a high degree of confidence that BF5 will ship in FY15.”

Investors shouldn’t take the EA comments about DICE too literally, writes Olson, and anyway, there are a lot of game titles to look forward to:

BF4 developer DICE has been quoted as saying it is “not moving onto future projects or expansions until we sort out all the issues with Battlefield 4.” We believe EA is projecting the message that they will do everything possible to get the issues fixed quickly, but this does not literally mean developers are being pulled from other projects [...] We would agree that ultimately the BF4 game engine needs to be repaired in order for BF5 to operate glitch free when released, but that should have no material impact on the ongoing development of BF5, which, if available in FY15, likely would not launch for another ~10 months, providing time for the engine to be repaired [...] FIFA World Cup, Dragon Age Inquisition, The Sims 4 and, we believe, a Battlefield 5 title will launch during EA’s fiscal ’15. For sake of conservatism, given BF5 has not been confirmed, we only assume 10m BF5 units in FY15 (vs. estimated 13m for BF4 in FY12). In our view, adding up reasonable sell-through for these titles provides evidence to believe FY15 revenue of >$4.3b is achievable (street consensus currently $4.2b).

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There are 3 comments

DECEMBER 5, 2013 3:40 P.M.

Capurnicus wrote:

As a long time supporter of Battlefield games, I wish I could say I enjoyed BF4. Unfortunately BF3 still trumps it in my book.

DECEMBER 7, 2013 12:39 A.M.

James Lawler wrote:

Per my conversation with an EA games tech support, "our game (BF4 for PS3) was the straw that broke the camels back", in reference to my PS3 console being broken. I was informed that the high FPS rate can lead to console damage. So much so that the EA tech even told me he cannot play the game on his PS3 console. Yet even with this knowledge I was denied a refund for the game and or any restitution for my damaged console. Forget worrying about BF5, the series died with BFBC2, because of EA - not DICE.

DECEMBER 10, 2013 8:07 A.M.

Skoups wrote:

I've been a proud BF player since 1942 buying each and every DLC ever released including BF4 premium. However, given the exceptionally buggy performance of this game, this is not only the last Battlefield game I'll ever buy, it is also the last EA title I'll buy. There are enough other production companies out there delivering better products at much better value of money.

I really hope they do succeed with BF5, unfortunately, I will not be supporting them ever again. Sorry EA, but enough is enough.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.